The fall of Communist Party leader Bo Xilai began as an exercise in crisis management for the Chinese Communist Party and it continues as such.

Bo — who is descended from Chinese Maoist royalty — had been flamboyantly running Chongqing, a Southwestern city of 32 million people, brutally suppressing opponents whom he accused of corruption. For this and his success in stimulating the local economy Bo enjoyed strong popular support which he had been using to angle for a position in the ruling Standing Committee. During the night of February 6, posts on the internet told us that Wang Lijun, Bo’s recently removed Police Chief and hatchet man was inside the U.S. consulate in Chengdu; apparently he had driven there, about 180 miles, in fear of his life.

Bloggers and ultimately the international press were on it like white on rice. Since the get-go many of the rumors flying around the Chinese blogs about what’s going on have been extremely accurate. There are over one billion cell phones in China, mostly having texting capability. By comparison, when the Party last had to deal with factional disagreement within its ranks during the Tiananmen Square incident in 1989 there were only around 200,000 cell phones in use (without texting) , and blogging hadn’t yet become a national pastime, so the leadership could handle its issues, under the then-strongly-consolidated power of Deng Xiaoping, behind closed doors.

At stake now is a struggle for the economic future of China. If Bo had gotten his way he would have relieved the strains beginning to show in today’s growth model by stepping on the gas, with a reinforced role for state-owned enterprises and a continuation of the reliance on capital expenditure by the State. By contrast, the joint approach of President Hu Jintao and Premier Wen Jiabao relies on markets and a shift to more dependence on the private sector. Attempting to consolidate his victory after the demise of Bo, Premier Wen recently moved further from support for the system that had been in effect for the last thirty years — which required households to provide low cost capital — by attacking the “monopoly” of the big Chinese banks.

When the charges accusing Bo’s wife of murdering the Englishman Neil Heywood were read on China TV, the announcer’s accompanying graphic was, verbatim, the very words she was reading. Each one was chosen carefully to illustrate some aspect of the truth being sold. The problem the Party now has is that there are too many moving pieces to control. The deceased Englishman is said to have sent information about the Bo family’s business dealings to an attorney in England. Heywood’s wife is trying to get out of China. Bo’s son has already been outside the mainland for years. Party factions with axes to grind haven’t gone away; the U.S. government has been admirably mum….so far.

Given Bo’s seniority, his support from certain elements within the Party, and his popularity with the common people, the Party has to walk a tight rope in how they paint Bo. Until very recently he was a senior member of the club; now he’s a bad guy. The fear is that in pillorying a leader of Bo’s stature for crime and corruption they may cover the Party itself in the same dirt.

What we have here is not a failure to communicate, but a necessity to do so at a once-in-a-decade juncture when a new leadership team is being installed. The Party could shut down the comment function on weibo (China’s twitter) but only for three days. We in the West like to emphasize that China is an undemocratic one-party state, but the Party must, in fact, be very sensitive to the people in whose name it rules. It enjoys a large repository of gratitude for improving the country’s position and the lot of the people. But the biggest threat to the Party is the patriotism of those same people, which could get out of hand at any time. And there lies the extra-strength Tylenol headache of the continuing Bo Xilai affair.

Miller is president and CEO of Ken Miller Capital and a member of the State Department’s advisory committee on international economic policy.